- Japan Economy Contraction
- U.S Coronavirus Infections Concerns
- Safe Haven Demand
USD/JPY edged lower, Friday morning, as investors retreated from the greenback even as it retained its safe-haven appeal on a spike in coronavirus infections. The pair has since faded its upward momentum after struggling to attract bids above the 107.47 level.
Dollar Strength Impact
The safe-haven pair continues to trade in a tight trading range. Weakness in the dollar could see the pair edging lower as the Yen continues to attract bids.
Time : 06-26-2020
Pivot : 107.25
Technical View : Long Above 107.45
Target : 107.57 next 2 targets are 107.65, and 107.86
Comments : Weak Bearish to Neutral
Last Price : 106.89
Technical View : Short below 107.05
Target : 106.88 next 2 targets are 106.81 and 106.59
Amidst the USD/JPY Sell-off, the greenback continues to hold firm as traders in the currency market remain wary of a spike in U.S. coronavirus infections in the U.S spike in new cases to levels last seen at the peak of the pandemic should continue to cast doubt about economic recovery.
The greenback is also eliciting strong demand in the forex market from corporates, heading into the end of the month. Likewise, the greenback is likely to remain firm conversely curtailing any downside action on the USD/JPY
Durable goods orders in the U.S did come better than expected, printing a 15.8% increase against an expected 10.6% increase. However, immediate data shows that U.S employers continue to lay off more workers due to the weak demand for goods in the U.S.
While the Yen has registered substantial gains against the dollar in recent days, it could come under pressure going forward. Bank of Japan Governor Haruhiko Kuroda, warning that the economy could experience negative growth in the second half of the year, could continue to weigh on Yen sentiments.
Likewise, economists warn that Japan’s GDP is likely to shrink by 22% this quarter, the highest in more than six decades, and continue to fuel dovish sentiments on the Yen. Yen Weakness should see the USD/JPY pair struggling to edge lower from current levels.
Looking ahead, the focus will be on the release of the U.S Core Personal Consumption Expenditure Price index likely to sway trader’s sentiments on the greenback conversely, USD/JPY price action. Traders also await the release of the Michigan Consumer Sentiment Final.